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The Power of Year-End Charitable Giving

As the year draws to a close, we may be looking forward to enjoying our time with loved ones or simply looking forward to a rest from our activities in the rest of the year. Charitable giving has always been a part of my year-end activities and many of the clients of Cereus Financial believe in the importance of philanthropy as well.

While any charitable giving is worthwhile, from throwing your change into a donation jar to creating and funding your own charitable foundation, there are ways to make your gifts more meaningful. There can be considerable tax benefits to Philanthropy and its important to understand the best ways to give. There are also ways to make your gifts more meaningful to ensure your charitable giving helps the causes you believe in. Philanthropy should be about fulfilling goals while maximizing your tax benefits.

Intentional Giving

I think it’s very important to understand the organizations you give to. Just because someone calls you up and talks you into a gift, does not mean your gift really went to help a cause you are interested in. Did you know that there are many charity scams out there and most of them call you up? Many of these have names related to legitimate charities in the areas of law enforcement and veteran’s services. Yet these scammers give almost none of the funds to these services. It is my policy to ALWAYS say no, when someone calls me up to ask for a donation. I want to choose the organization I give to by researching them on the internet and making sure its not a scam.

The other problem with telephone solicitations is that the callers are often paid solicitors who only give a fraction of the donations to the charity in question. The charity itself may be legitimate, but if you send them a check or donate through their online portal, the charity gets 100% of the donation and the paid telephone solicitor will only give the charity 10% of your donation. Again, always say no on the phone.

Take the time to research your charity. Websites such as Charity Navigator and Guidestar maintain ratings of charities and you can see which ones rate best in the areas you want to donate. Here are some charities that I personally donate to and like, but it’s easy enough to create your own list:

  • Food Insecurity
    • Community Foodbank of New Jersey (Local Charity)
    • Center for Food Action (Local Charity)
    • Feeding America (National Charity)
  • Environmental
    • New York New Jersey Trail Conference (Local)
    • Land Conservancy of New Jersey (Local)
    • Open Space Institute (National)
  • Social Justice and Education
    • The Bail Project (National)
    • One Goal for Education (National)
    • Safe Families (Local)
  • Cultural
    • The Stickley Museum (Local)
    • NPR (National)
    • The Mahwah Museum (Local)
  • Relief
    • International Rescue Committee (National)
    • Oxfam (National)
    • Global Giving (National)

I give to many more charities, but these are just a few.

Tax Considerations

You get a federal tax deduction for giving to charity, but you only get that tax deduction if you itemize your deductions. With the current federal tax rules, many people can’t itemize and just take the standard deduction. But there are a couple of ways you can still get a tax benefit, even if you don’t itemize.

Qualified Charitable Distribution

This technique works for those who are over age 70 ½. If you have a traditional IRA, you can make a direct transfer from the traditional IRA to a charity. It’s called a Qualified Charitable Distribution or QCD. You cannot take a tax deduction for the QCD, but normally a distribution from your IRA would be taxable. By making a QCD, you are avoiding paying the tax on the distribution. This is actually equivalent to a tax deduction and even better, you can benefit even if you don’t itemize deductions. There is a $100,000 limit on QCDs per year in 2023, although that limit will start to be indexed for inflation in 2024. If the QCD is the first money out of your IRA for the year, then it counts as part or all of your Required Minimum Distribution for the year.

Donate Appreciated Property

If you have any kind of property or security which has appreciated in value, you can donate it directly to a charity (or use a Donor Advised Fund. See below). Not only will you get a tax deduction if you can itemize, but you save on the capital gains taxes you would have paid if you sold the property. While property could be real estate, this works extremely well with shares of stock in publicly-traded companies. I always donate highly appreciated stock to my Donor Advised Fund and then make grants from that DAF to charities.

Bunch Donations with a Donor Advised Fund

Maybe you can’t itemize deductions with only one year of donations, but what if you could bunch multiple years of donations in one year? You can do this with a DAF. A Donor Advised Fund is a great tool. It is a charity itself, so any donations to the DAF are deductible. Donating highly appreciated stock is easy with a DAF, but you can find DAFs to take real estate or even possibly stock of non-publicly-traded companies if they can be valued. Once the money is in the DAF, then you can direct the DAF to make grants to your favorite charities for years in the future. The only restriction is that the charity must be a 501(c)(3) and you cannot receive any benefit from your donation. So just tell them not to send you the tote bag!

Impactful Giving: Making a Difference That Matters

Most importantly, the impact of charitable giving extends far beyond the immediate financial value. Giving back creates a ripple effect that touches lives, uplifts communities, and drives positive change. Whether you choose to support education, healthcare, environmental conservation, and/or social justice initiatives, every contribution you make has the potential to create a lasting impact on our world.

At Cereus Financial, we advocate for giving strategies that align with both your personal financial goals and the overall betterment of society. We empower our clients with the knowledge they need to make informed decisions about their charitable contributions, ensuring that their generosity creates a tangible and meaningful difference for both the charity they choose to benefit, as well as themselves.

Let’s work together to make this year’s end not only a time for financial planning, but also for making a difference that resonates for years to come.

Contact Cereus Financial today to explore how you can maximize your charitable giving in a way that benefits both you and our world.

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